In my day, we went out and reviewed a hundred properties just to close one deal. It took weeks, even months, but this was one of the best teaching tools I could have encountered. By looking at all those deals, I learned to narrow down exactly what I was looking for and what I was willing to pay when it came to a real estate property.
One of my employees came in a few months ago, all excited because she’d just bought a house online … through an auction! Of course, I know a little about real estate auctions and have stood on quite a few courthouse steps to listen to trustee foreclosure deals. Mainly, however, I was in attendance to get educated about that avenue for finding investments, not to bid.
I frowned at my employee and gave her my two cents of wisdom about dangers to watch out for when buying a property on the court steps. The main danger is not being allowed to see the property, which means you can’t conduct your own due diligence. A second danger, especially for someone like me, is getting caught up in the bidding process. It’s hard not to get focused on winning the bid rather than getting the best deal.
My employee just gave me a smile with a hint of smirk. “Robert,” she said, “that’s not how this works. This is an online auction.”
A good friend and CEO of Rich Dad Coaching was telling me about Auction.com. That site hosts the biggest online auction for real estate in the world, with over $26 billion in sales since 2006, and is where my employee bought the investment property she was telling me about. I had to know more, so I recently sat down with her to learn about this new way to buy property.
It turns out she used Auction.com to review hundreds of deals. What would have taken me weeks or months to accomplish in the traditional way took her days, even just hours. And every property at Auction.com is for sale; it’s not like looking at properties on Zillow. It’s not window shopping—it’s shopping at the frenzied discount of blowout sales!
The value of admitting what you don’t know
Much of the confusion around investing has to do with the words the experts, semi-experts, so-called experts, and non-experts use. Most of it is jargon.
Sometimes I think people use all that jargon to confuse us on purpose, either to make themselves sound smarter or to confuse us into buying something we don’t want or really need.
More often than not, we succumb to jargon because we don’t want people to know we don’t know what they’re talking about! Instead of asking them to explain things, we pretend to understand because we don’t want to look stupid. Stop pretending because that’s when you look stupid.
The reality is that the financial world is filled with jargon. It’s a reality that is never going away. So the key is to know how to deal with it so that you can move on and be successful.
When it comes to jargon, the three rules I’ve learned to follow are:
1. Increase your vocabulary every day
Don’t be intimidated, or lazy, when a word is used you don’t understand. If you’re having a conversation and an unfamiliar word is used, ask the person who used it what it means, or write it down and then later go look it up. If you’re reading or watching TV and unknown terminology creeps in, look up the words in a dictionary.
2. Ask questions
Always be curious. Even when you have some knowledge on a subject, keep asking questions. You can always learn more. Two things happen when you ask an expert or semi-expert questions:
- You build instant rapport with that person because he or she sees that you really are interested in the subject.
- You learn more.
And both of those are immensely valuable.
3. Look stupid whenever possible
Don’t be afraid to say, “I don’t know.” The fastest way to impede your learning is to pretend to know all the answers—to act as if you know what someone is talking about when you don’t. Being afraid to look stupid only makes you stupid.
I truly think one of the advantages we women have today is that most of us have not been educated in the world of money, finance, and investing. So we’re not afraid to say, “I don’t know.” We haven’t been expected to know. We’re not afraid to ask questions. We’re not afraid to admit the fact that even though we appear to be Superwoman ten times over, we actually do not have all the answers.
Don’t allow jargon and confusing words be intimidating or become an obstacle for you. They are only words; every word has a definition that can be looked up.
Instead of being overwhelmed, be excited each time you hear a new financial term. With each new word you learn, you become a much smarter and better investor.
Almost everyone I meet would like to be rich. But did you know there is something more important than just being rich? It’s how you get rich.
Rich dad would tell me that there are many ways a person can get rich, and each one has a price.
You can become rich…
1. By marrying someone for his or her money
Rich dad would scrunch up his face and say, “Both men and women marry for money, but can you imagine spending your life with someone you don’t love? That is a very high price.”
2. By being a crook, a cheat, or an outlaw
Rich dad would say, “It is so easy to become rich legally. Why would people want to break the law and risk going to jail unless they really enjoy the thrill of it? To risk going to jail is too high a price for me. I want to be rich for my freedom, so why risk going to jail? I would lose my self-respect and could not face my family and friends. Honesty is always the best policy.”
3. Through inheritance
Rich dad would often say about his son, “Mike often feels like he did not earn his keep. He wonders if he could have become rich on his own. I have therefore given him very little. I have guided him as I guide you, but it is up to him to create his own wealth. It is important for him to feel he has earned it. Not everyone fortunate enough to inherit money feels fortunate.”
4. By winning the lottery
“It’s OK to buy a ticket now and then, but to bet your financial life on winning the lottery is a fool’s plan to becoming rich,” said rich dad.
Living your life with odds of one in a hundred million is a very high price to pay. Unfortunately, that is how many Americans hope to become rich. And even if you win, you don’t have a plan on how to handle the problem of too much money. Many lottery winners squander their newfound wealth and go back to being poor.
5. By being famous
Rich dad would say, “I’m not smart, talented, good looking, or entertaining. So becoming rich by being outstanding is not realistic for me.”
Hollywood is filled with actors who are broke. Clubs are filled with rock bands dreaming of cutting a platinum record. The golf course is filled with golfers dreaming of becoming a pro like Tiger Woods. However if you look at Tiger’s life, you will notice he paid a high price to get where he is today. He started playing at the age of three and didn’t turn pro until he was twenty-years-old. His price was seventeen years of practice.
6. By being greedy More »
At some point in life, we all want to lose a little weight. Losing weight (and keeping it off!) is a process. You don’t just go to bed and then wake up slim and trim. Nope. You exercise regularly. You make some changes to your diet. And over time you start to see the results.
Investing is the same way. There is no secret get-rich-quick formula. You don’t go to bed one night and wake up wealthy the next morning. There may be people who promise these things, but I have yet to see one that lasts for the long-term.
Investing is a journey
In the process of becoming investors, we learn. We get some hands-on experience. We make mistakes—and learn from them. We get more and more experience. And in this process our knowledge, our confidence, and our abilities grow. Not to mention our bank accounts. In many ways, investing is a journey filled with highs and lows, joys and sorrows. But a journey always worth taking.
The journey is the reward
This is the key: The process we go through is even more important than the end goal. Who we become in the process, as a result of all the learning, mistakes, and experience, is where the real value lies.
As the old Chinese proverb goes, “The journey is the reward.”
The journey can be hard
1985 was the year from hell. Robert and I lost pretty much everything. At one point, we even lived in our car. It was undeniably the worst year of our lives. My self-esteem was crushed. The upsets were constant. My inner voice was saying persistently negative things like, “You can’t do that,” “You’re going to fail,” “You don’t know anything,” and, “You’re hopeless.”
I would honestly go to bed some nights thinking how much easier it would be if I just never woke up. It was the lowest point of my life.
The journey is worth it
Now, looking back many years later, I realize that Robert and I were both going through our own processes. There was no pretending: it was miserable. Yet, by going through that process, hitting bottom and then pulling ourselves back up, it was probably one of the best things that could have happened for both of us.
The result of that extremely difficult time made both Robert and me stronger and smarter individually and more committed and assured as a couple. It was invaluable. That was the reward at the end of the process.
Start your journey today
I guarantee that your own journey is waiting for you today. On it, you will make mistakes—sometimes huge ones! You will be challenged. You’ll have fearful moments. There will be times when your character is tested. But if you shy away from the challenge, you won’t grow. You won’t learn. And you won’t gain anything.
Today is the day to start your journey.
When I was younger, my rich dad said to me, “The rich get richer partly because they invest differently than others. They invest in things that are not offered to the poor and the middle class. Most important, however, they have a different educational background. If you have the right financial education, you will always have plenty of money.”
Rich dad often spoke of the three E’s of successful investors have. They are:
Most people understand reading, writing, and arithmetic. But those who are financially successful also have a different kind of education—financial education.
Financial education is the foundation for building wealth.
You know you are financially smarter when you can tell the difference between:
- Good debt and bad debt
- Good losses and bad losses
- Good expenses and bad expenses
- Tax payments versus tax incentives
- Corporations you work for versus corporations you own
- How to build a business, how to fix a business, and how to take a business public
- The advantages and disadvantages of stocks, bonds, mutual funds, business, real estate, and insurance products, as well as the different legal structures
A successful investor has a plan, is focused, and plays to win. This doesn’t mean that you won’t fail. Failure is part of the game. What separates the winners from the losers when it comes to investing is the ability to take the experiences, both successes and failures, and to learn from them to get better and better. That is what I mean by experience.
Most people do not learn from their successes and failures. Instead, they jump from one thing to another hoping one will stick. Hot tips don’t make you rich, experience does.
3. Excess cash
When most people hear they need excess cash to be a successful investor, they check out. I often hear them say things like, “I’m living from paycheck to paycheck,” or, “I’ll never have enough money to really invest well.”
The problem is that people hear excessive cash instead of excess cash.
When Kim was first starting out investing, she bought a small house in Portland, Oregon. She did not have a lot of extra money on hand. But she did have a great financial education, a plan, and was building her experience. She was able to save up the money needed for the down payment, and purchase the property. It cash flowed about $25 per month.
There is nothing wrong with starting small. It is through small investments that are successful that you can grow to larger and larger investments. Today, Kim owns thousands of apartment units across the US.
How’d she get there?
It started with financial education, continued with experience, and was kick started by wisely investing a little bit of excess cash. You can do the same, starting today.